Let’s talk about !

by | Feb 25, 2019 | Blog, Taxes | 0 comments

” is a loaded word for accountants. It is very much described in the same regards as “time”, in that there never seems to be enough time when it is needed most. For many shareholders, is starting to come into play at time and many are unprepared for that complication when they are trying to get their taxes wrapped up.

The IRS is now requiring to be included with personal return filings, which is adding to the ever growing list of new data they require each year. The day is coming when the IRS will simply be able to send a letter (THEY NEVER CALL FIRST!!!) to Tom Taxpayer asking them (Tom) to provide the details of their basis calculations for their 20XX returns. Hopefully, Tom didn’t use Turbotax or a large prep chain to “help” him determine his basis; if he did, then he will likely have a hard time extracting that information in a meaningful way.  

To understand basis, the business owner needs to take a deep dive into the US code to figure out what the heck the word “basis” even means. In most cases, the basis is not the cash in the bank, value of the business, or some other tangible number on the financials. Particularly with pass-through entities, like S-corps, there are also complex rules about the different elements that comprise basis, and many of them are not intuitive or reasonable. An accurate basis calculation is very important, however; and having an incorrect basis calculation can be a costly mistake.

If a business had a $75,000 profit and the business owner took out $70,000 during the year in distributions, then that would leave a $5,000 basis to carry into the next year. However, if the business owner took a loan during the year and spent more than was earned, what happens? What about when a large purchase is financed and creates a tax loss? What are the specific rules about real estate basis calculations? Turbo Tax, H&R Block, or any of the other tax prep chains will have a tough time answering those questions; “its complicated” is probably the most accurate answer and the best they can do.

The CPA’s and accountants at GP CPA have years of experience with basis calculations and can explain how it works for your business in a straightforward way that will help you prepare for the future. Simply tracking basis is not enough for today’s tax code challenges and the first quarter of the year is not the time to get interested in learning about last year’s basis. Get the right information all year long with , contact us now to get a handle on basis.

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H. Johns
H. Johns
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This firm is absolutely the best that I've dealt with when it comes to CPAs and financial advice. I'd gone to another CPA in the area for help with my small business during tax time, they stopped communicating and I was left with important documentation not filed and a lot of anxiety around what to do. My appointment with Justin was set up quickly and I was in within a couple days to sit down with him. When you first meet him, you get the impression that he's incredibly intelligent and knows what he's talking about. He took the time to guide me through each and every step that I needed to take to move forward and actually ended up saving me money. I am so grateful to him for his knowledge and professionalism. Total life saver! If you're a small business owner, you should not be taking your time, money or business anywhere else but GP CPA and their crew 🙂read more
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Tina Simmons
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Bravo4 Autowerks
Bravo4 Autowerks
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Gary and his team have been fantastic for me and my business. They respond well to all my questions, are very helpful and of course keep my financials in order. Highly recommended.read more
Queen City Newborn Care
Queen City Newborn Care
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I was drowning before I met Justin. He totally transformed how I run my small business and has gotten me organized in ways I didn't even know were possible. I am so grateful for his advice and suggestions! This company is worth every penny.read more
Dennis Bloomberg
Dennis Bloomberg
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Unfortunately, I found GMP when my mother passed. She had a trust set up and I had no experience with one. I received excellent advice prior to filing taxes, that allow for the transfer of assets with little tax implication. The tax process was simple for me, Justin took over once he had details and cleared up all question from filing our taxes. Thank you for a job well done!read more
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Natalie Knight
15:35 21 Nov 18
Prusiensky CPA is up to date on technology. They handcraft a platform that works best for your company's accounting services. We really appreciate how hands on and quick their team is when replaying to any type of correspondence. Simply put, they care and want your company to succeed.read more
Ashlyn Lelej
Ashlyn Lelej
14:39 21 Nov 18
I highly recommend Justin at Prusiensky, CPA for all of your accounting and tax needs. I've been a client for over two years, and have been consistently impressed with their dedication to helping my business grow and be financially successful. His advice is invaluable. Thank you!read more
Bobby Nguyen
Bobby Nguyen
22:23 20 Nov 18
My partner and I started our very first small business last year. Justin has been a blessing to us. Being new at all of this, we didn’t understand much of how business taxes work. Justin explained and answer all of questions that we have. He took care of everything for us throughout the year and have made life so much easier for us. I couldn’t have asked for a better CPA. Highly recommended!read more
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